Carter and ORS and Commissioner Of State Revenue
[2016] WASAT 56
•13 MAY 2016
CARTER & ORS and COMMISSIONER OF STATE REVENUE [2016] WASAT 56
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2016] WASAT 56 | |
| TAXATION ADMINISTRATION ACT 2003 (WA) | |||
| Case No: | DR:207/2015 | 26 NOVEMBER 2015 | |
| Coram: | MR M SPILLANE (SENIOR MEMBER) | 13/05/16 | |
| 28 | Judgment Part: | 1 of 1 | |
| Result: | Commissioner of State Revenue's decision of 24 August 2014 set aside Matter sent back to Commissioner for assessment in accordance with the Tribunal's reasons | ||
| B | |||
| PDF Version |
| Parties: | PETER CARTER SHELLEY CARTER MALCOLM DEMPSEY SAMANTHA DEMPSEY DONALD HOLMES SARINA HOLMES JOHN LYONS DEBRA LYONS COMMISSIONER OF STATE REVENUE |
Catchwords: | Land tax Subdivision Whether lot redundant Proper construction of definition of 'lot' under Glossary to Land Tax Assessment Act 2002 (WA) |
Legislation: | Land Tax Assessment Act 2002 (WA), s 4, s 21, s 24A, s 43A, s 43A(1), cl 1, cl 2, cl 3 Strata Titles Act 1985 (WA), s 4, s 4(1), s 4(4), s 5B(2), s 5B(2)(a) Taxation Administration Act 2003 (WA), s 40(1) Transfer of Land Act 1893 (WA), s 58, s 63 |
Case References: | Alcan (NT) Alumina Pty Ltd and Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211 Commissioner of the Australian Federal Police v Courtenay Investments Ltd (No 2) [2014] WASC 55 Drouin Commercial Pty Ltd and Commissioner of State Revenue [2009] VCAT 1082 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 Lonepine Enterprises Pty Ltd and Commissioner of State Revenue [2008] WASAT 183 |
Orders | 1. The Commissioner of State Revenue's reassessment of land tax dated 24 August 2014 that Lot 29 on Diagram 22102, Certificate of Title Volume 1201, Folio 935 does not qualify for the exemption from land tax under s 24A of the Land Tax Assessment Act 2002 (WA) is set aside.,2. The matter is sent back to the Commissioner of State Revenue for assessment in accordance with the reasons for decision dated 13 May 2016 published with this order. |
Summary | In July 2008, four couples purchased Lot 29 on Diagram 22102, Certificate of Title Volume 1201 Folio 935, intending to develop four new apartments. ,In October 2011, a partial exemption under s 24A of the Land Tax Assessment Act 2002 (WA) was granted on the condition that two of the couples would use Lot 29 as their primary place of residence prior to the end of the 2012/2013 assessment year.,In March 2014, that provisional exemption was rolled forward to the 2012/13 and 2013/2014 assessment years as construction of the private residences was not completed.,On 12 June 2014, occupancy permits were issued for four new dwellings and the relevant parties commenced occupancy on 20 and 28 June 2014.,On 9 July 2014, certificates of title for the four lots containing the four new dwellings, namely, Lots 1, 2, 3 and 4 on Strata Plan 66512, were issued and Certificate of Title Volume 1201 Folio 935 for Lot 29 was cancelled.,Following a reassessment, the Commissioner of State Revenue found that as the new lots had come into existence for land tax purposes on 12 June 2014 with the issue of the occupancy permits, Lot 29 ceased to exist for land tax purposes as of that date. Consequently, the construction of the private residences on Lot 29 were not completed and occupied by the owners as their primary place of residence prior to the end of the 2013/2014 assessment year and land tax was therefore payable.,The parties applied to this Tribunal to review that decision.,Having heard all of the evidence and the detailed arguments of counsel on behalf of both of the parties, the Tribunal found that Lot 29 had not ceased to exist for the assessment on 12 June 2014 and was available to allow the applicants to qualify for an exemption under s 24A of the Land Tax Assessment Act 2002 (WA) as of 30 June 2014.,The Tribunal set aside the Commissioner's decision and referred the matter back to the Commissioner for assessment in accordance with the Tribunal's reasons. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : TAXATION ADMINISTRATION ACT 2003 (WA) CITATION : CARTER & ORS and COMMISSIONER OF STATE REVENUE [2016] WASAT 56 MEMBER : MR M SPILLANE (SENIOR MEMBER) HEARD : 26 NOVEMBER 2015 DELIVERED : 13 MAY 2016 FILE NO/S : DR 207 of 2015 BETWEEN : PETER CARTER
- SHELLEY CARTER
MALCOLM DEMPSEY
SAMANTHA DEMPSEY
DONALD HOLMES
SARINA HOLMES
JOHN LYONS
DEBRA LYONS
Applicants
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Land tax - Subdivision Whether lot redundant Proper construction of definition of 'lot' under Glossary to Land Tax Assessment Act 2002 (WA)
Legislation:
Land Tax Assessment Act 2002 (WA), s 4, s 21, s 24A, s 43A, s 43A(1), cl 1, cl 2, cl 3
Strata Titles Act 1985 (WA), s 4, s 4(1), s 4(4), s 5B(2), s 5B(2)(a)
Taxation Administration Act 2003 (WA), s 40(1)
Transfer of Land Act 1893 (WA), s 58, s 63
Result:
Commissioner of State Revenue's decision of 24 August 2014 set aside
Matter sent back to Commissioner for assessment in accordance with the Tribunal's reasons
Summary of Tribunal's decision:
In July 2008, four couples purchased Lot 29 on Diagram 22102, Certificate of Title Volume 1201 Folio 935, intending to develop four new apartments.
In October 2011, a partial exemption under s 24A of the Land Tax Assessment Act 2002 (WA) was granted on the condition that two of the couples would use Lot 29 as their primary place of residence prior to the end of the 2012/2013 assessment year.
In March 2014, that provisional exemption was rolled forward to the 2012/13 and 2013/2014 assessment years as construction of the private residences was not completed.
On 12 June 2014, occupancy permits were issued for four new dwellings and the relevant parties commenced occupancy on 20 and 28 June 2014.
On 9 July 2014, certificates of title for the four lots containing the four new dwellings, namely, Lots 1, 2, 3 and 4 on Strata Plan 66512, were issued and Certificate of Title Volume 1201 Folio 935 for Lot 29 was cancelled.
Following a reassessment, the Commissioner of State Revenue found that as the new lots had come into existence for land tax purposes on 12 June 2014 with the issue of the occupancy permits, Lot 29 ceased to exist for land tax purposes as of that date. Consequently, the construction of the private residences on Lot 29 were not completed and occupied by the owners as their primary place of residence prior to the end of the 2013/2014 assessment year and land tax was therefore payable.
The parties applied to this Tribunal to review that decision.
Having heard all of the evidence and the detailed arguments of counsel on behalf of both of the parties, the Tribunal found that Lot 29 had not ceased to exist for the assessment on 12 June 2014 and was available to allow the applicants to qualify for an exemption under s 24A of the Land Tax Assessment Act 2002 (WA) as of 30 June 2014.
The Tribunal set aside the Commissioner's decision and referred the matter back to the Commissioner for assessment in accordance with the Tribunal's reasons.
Category: B
Representation:
Counsel:
Applicants : Mr JR Ludlow
Respondent : Ms R Panetta
Solicitors:
Applicants : HWL Ebsworth Lawyers
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Alcan (NT) Alumina Pty Ltd and Commissioner of Territory Revenue (NT) (2009) 239 CLR 27
Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211
Commissioner of the Australian Federal Police v Courtenay Investments Ltd (No 2) [2014] WASC 55
Drouin Commercial Pty Ltd and Commissioner of State Revenue [2009] VCAT 1082
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503
Lonepine Enterprises Pty Ltd and Commissioner of State Revenue [2008] WASAT 183
Background facts
1 The facts were not in dispute. On 29 July 2008, Peter and Shelley Carter (as to 63/200 undivided shares), Malcolm and Samantha Dempsey (as to 60/200 undivided shares), John and Debra Lyons (as to 50/200 undivided shares) and Donald and Sarina Holmes (as to 27/200 undivided shares) (applicants), became the registered proprietors of Lot 29 on Diagram 22102, Certificate of Title Volume 1201, Folio 935 (Lot 29).
2 The applicants intended to develop a multi-level residential complex consisting of four new apartments.
3 On 7 January 2010, a contract with D & R Group Pty Ltd trading as Davrob Construction & Project Management was signed for the construction of four private units on Lot 29.
4 Upon completion, each couple would own one of the apartments.
5 On 19 October 2011, an application for exemption under s 24A of the Land Tax Assessment Act 2002 (WA) (LTA Act) was forwarded to the Office of State Revenue (OSR) by the Dempseys.
6 On 21 October 2011, a partial exemption under s 24A of the LTA Act was provisionally granted to Lot 29 for the 2011/2012 and 2012/2013 assessment years on the condition that the Carters and Dempseys would use Lot 29 as their primary place of residence prior to the end of the 2012/2013 assessment year. The exemption was not provisionally granted in relation to the Lyons and the Holmes as they were already receiving a s 21 exemption in relation to other property.
7 On 4 March 2014, the provisional exemption was rolled forward to the 2012/2013 and 2013/2014 assessment years as construction of the private units that formed part of Lot 29 was not completed prior to the end of the 2012/2013 assessment year.
8 On or around 3 June 2014, D & R Group Pty Ltd trading as Davrob Construction and Project Management applied to the City of South Perth (City) for an Occupancy Permit for the purposes of, amongst other provisions, s 5B(2)(a) of the Strata Titles Act 1985 (WA) (ST Act).
9 On 12 June 2014, the City issued an Occupancy Permit and approved Strata Plan 66512.
10 On 20 June 2014, the Dempseys and the Lyons commenced occupancy of their units and on 28 June 2014, the Carters commenced occupancy of their unit.
11 On 9 July 2014, the applicants applied to register the Strata Plan for Lot 29 and certificates of title for four lots, namely Lots 1, 2, 3 and 4 on Strata Plan 66512, were issued and Certificate of Title Volume 1201 Folio 935 on Diagram 22102 for Lot 29 was cancelled.
12 By letter of 24 August 2014, the respondent wrote to the applicants stating:
I refer to your application for exemption under section 24A of the LTAA dated 19 October 2011, and the subsequent provisional exemption that was applied to lot 29D22102 93 South Perth Esp South Perth WA ('Lot 29 on Diagram 22102') for the 2012/13 and 2013/14 assessment years.
A recent investigation has revealed that Lot 29 on Diagram 22102 was subdivided into lots 1 on Strata Plan 66512 93 South Perth Esp South Perth WA, 2 on Strata Plan 66512 93 South Perth Esp South Perth WA, 3 on Strata Plan 66512 93 South Perth Esp South Perth WA and 4 on Strata Plan 66512 93 South Perth Esp South Perth WA (collectively referred to as the 'resultant lots') on 12 June 2014.
Consequently, construction of the private residences that were to form part of Lot 29 on Diagram 22102 were not completed and occupied by the owners as their primary place of residence prior to the end of the 2013/14 assessment year. Occupation of the completed private residences occurred on the resultant lots.
As a result, Lot 29 on Diagram 22102 does not qualify for the provisional exemption from land tax previously allowed under section 24A of the LTAA for the 2012/13 and 2013/14 assessment years.
13 In the same letter under the heading 'Reassessment of Land Tax', the respondent further stated:
…
The issue to be determined is therefore whether construction of the private residences that comprise part of lot Lot 29 on Diagram 22102 were completed, and occupied by the owners as their primary place of residence prior to the end of the 2013/14 assessment year.
14 The respondent then set out the historical background outlined earlier, and stated:
…
The provisional exemption under section 24A of the LTAA was granted to Lot 29 on Diagram 22102.
At the time the provisional exemption was granted Lot 29 on Diagram 22102 satisfied the definition of a lot provided in clause 2(1)(a)(ii) of the Glossary to the LTAA.
In accordance with clauses 3(1)(d)(ii) and 3(2) of the Glossary to the LTAA, Lot 29 on Diagram 22102 was subdivided into the resultant lots as of the date that the City of South Perth approved Survey-Strata Plan 66512, being 12 June 2014.
Each of the resultant lots satisfy the definition of a lot in clause 2(1)(a)(vii) of the Glossary to the LTAA from 12 June 2014 onwards.
As result, Lot 29 on Diagram 22102 ceased to exist for the assessment land tax at the date of subdivision approval.
Consequently, the private residences that comprise part of Lot 29 on Diagram 22102 were not completed and occupied by the owners of the lot as their primary place of residence prior to the lot becoming redundant.
…
15 By letter of 6 November 2014, lawyers on behalf of the applicants lodged a notice of objection to the respondent's reassessment, and by letter of 4 May 2015 the respondent disallowed that objection in full.
16 The applicants then filed an application dated 2 July 2015 under s 40(1) of the Taxation Administration Act 2003 (WA) (TA Act) with this Tribunal seeking a review of the respondent's decision, which review was heard on 26 November 2015 following which both parties were given leave to file further written submissions.
Issue for determination
17 It was agreed by the parties that the issue for determination before the Tribunal was whether an exemption under s 24A of the LTA Act ought to have been granted for the 2012/2013 and 2013/2014 assessment years.
Relevant statutory provisions
18 Section 24A of the LTA Act states:
Construction of private residence, 2 year exemption for
(1) Private residential property (except property held in trust) that is owned by an individual is exempt for 2 consecutive assessment years if
(a) the commencement date for the construction of the private residence that forms part of the property is
(i) in the first assessment year; or
(ii) in any previous financial year and part of the construction is carried out in the first assessment year;
and
(b) the completion date for the construction is in the second assessment year; and
(c) at midnight on 30 June immediately before the first assessment year, the individual owned the land on which the private residence is constructed; and
(d) the individual is the first occupant of the private residence; and
(e) the individual uses the private residence as his or her primary residence during the second assessment year.
(2) However, the property is not exempt if
(a) the individual or any other person derived any income from the property in the period between the beginning of the first assessment year and the time when the property was first occupied; or
(b) any other private residential property owned by the individual is exempt for either assessment year under another provision of this Division as a result of its use by the individual as his or her primary residence.
(3) The individual may apply for the exemption in the approved form after the commencement date for the construction.
(4) The Commissioner may require the individual to notify the Commissioner in the approved form of
(a) the completion date for the construction; and
(b) when the individual occupies the private residence.
(5) The Commissioner is to make any reassessment necessary to give effect to this section.
19 Section 4 of the LTA Act under the heading 'Terms used' states:
The Glossaries at the end of this Act and the Taxation Administration Act 2003 respectively define or affect the meaning of some of the words and expressions used in this Act, and also affect the operation of other provisions.
20 Clause 1 of the Glossary mentioned in s 4 is headed 'Terms used' and defines the following terms
commencement date, for the construction or refurbishment of a private residence, means
(a) if the residence is to be constructed or refurbished under a building contract the date when the contract is made; or
(b) if the residence is to be constructed or refurbished by an ownerbuilder the date when the building permit for the work is granted under the Building Act 2011[.]
completion date, for the construction or refurbishment of a private residence, means the date when the construction or refurbishment is completed to the point where the residence is ready for occupation[.]
…
land includes all tenements and all interests in land[.]
…
lot has the meaning given in clause 2[.]
…
parcel means 2 or more lots of land that are treated as a single property under clause 2[.]
…
private residence means a building or part of a building that was occupied, or fit to be occupied and intended by the owner to be occupied, as a place of residence of one or more individuals, except a building or part of a building that is
(a) used as a hotel, motel, hostel, lodging house or boarding house; or
(b) ordinarily used for holiday accommodation; or
(c) used as an educational institution, college, hospital or nursing home; or
(d) used as a club; or
(e) used as a home for aged or disabled persons by an eligible organisation within the meaning of the Aged or Disabled Persons Care Act 1954 of the Commonwealth; or
(f) prescribed or of a prescribed class[.]
private residential property means
(a) a lot of land on which there is a private residence; or
(b) a parcel of land on which there is a private residence constructed so that part of the residence stands on each of the lots of land that constitute the parcel; or
(c) an interest in a home unit; or
(d) for the purposes of sections 24, 24A, 27, 27A and 28 a lot of land on which a private residence is being or has been constructed[.]
…
subdivided, in relation to land, has the meaning given in clause 3[.]
21 Clause 2 of the Glossary states:
Lots and parcels of land
(1) In this Act unless the contrary intention appears
lot means a defined portion of land
(a) which is the whole of the land the subject of
(i) a Crown grant issued under the Land Act 1933; or
(ii) a certificate of title registered under the Transfer of Land Act 1893; or
(iii) a certificate of Crown land title or qualified certificate of Crown land title, created and registered under the Transfer of Land Act 1893; or
(iv) a survey into a location or lot under the Land Administration Act 1997 section 27(2); or
(v) a partlot shown on a diagram or plan of survey of a subdivision deposited with the Land Information Authority; or
(vi) a conveyance registered under the Registration of Deeds Act 1856; or
(vii) a lot depicted on a strata plan or surveystrata plan where the land the subject of the plan has been subdivided within the meaning given in clause 3(1)(d) or (e); or
(viii) an entitlement to occupy a nonstrata home unit;
or
(b) depicted on a plan or diagram available from, or deposited with, the Land Information Authority and for which a separate Crown grant or certificate of title has been or can be issued; or
(c) depicted on a diagram or plan of survey of a subdivision approved by the Western Australian Planning Commission.
[(2) deleted]
(3) If 2 or more lots of land in the same ownership have common boundaries, the Commissioner may treat the lots as a single property for valuation and assessment if it is appropriate to do so.
(4) However, for the purpose of determining the use of a lot or parcel of private residential property, 2 or more lots of land are not to be treated as a single private residential property unless the Commissioner is satisfied that the lot or lots on which the private residence is constructed (the home lot) and each other lot (the other lots) are established, and used by the individuals who reside there, as one integrated area that constitutes the place of residence.
…
22 Clause 3 of the Glossary states:
Subdivided land
(1) Land is subdivided when
(a) a plan of subdivision of the land is approved by the Western Australian Planning Commission for the purposes of section 135 of the Planning and Development Act 2005; or
(b) a transfer, conveyance, lease or mortgage of any land is approved by the Commission under section 147(1) of that Act or an application for the creation and registration of a certificate of title is approved by it under section 147(2) of that Act and the effect of the approval is to allow a dealing with a part of the land which is less than a whole lot; or
(c) on an application for review under section 251 of that Act, the State Administrative Tribunal gives an approval referred to in paragraph (a) or (b); or
(d) in the case of land that is the subject of a strata plan
(i) if the plan is required to be accompanied by a certificate under the Strata Titles Act 1985 section 25 the plan is approved by the Commission; or
(ii) if not an occupancy permit or a building approval certificate required under the Strata Titles Act 1985 section 5B(2) is granted under an application mentioned in the Building Act 2011 section 50(1)(a) or (b);
or
(e) a statement is endorsed on a plan under section 25B of the Strata Titles Act 1985.
(2) An approval referred to in subclause (1) is conclusively presumed to have been given on the date appearing in the approval as endorsed on the plan, instrument or application referred to in that paragraph.
Statutory interpretation
23 As submitted by the respondent and accepted by the applicants, the modern approach to statutory construction in Western Australia was summarised by Edelman J in Commissioner of the Australian Federal Police v Courtenay Investments Ltd (No 2) [2014] WASC 55 at [14]:
The key integers in the exercise of determining the effect of Parliament's intention in s 64(2) are statutory text, context, and purpose. The starting point, and the end point, is the text. But, although the statutory text is the 'surest guide' to Parliament's intention, the text must be read in the widest sense of context, including the general purpose and policy of the provision.
- And Buss JA in Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211 at [160]:
The modern approach to statutory construction is purposive. The statutory text is the surest guide to parliament's intention. A decision as to the meaning of the text must begin by considering the context, in its widest sense. This will include the general purpose and policy of the provision.
(Citations omitted)
25 The Tribunal also accepts the Commissioner's submission that one can have regard to extrinsic materials and legislative history. As stated by Judge Chaney, as he then was, in Lonepine Enterprises Pty Ltd and Commissioner of State Revenue [2008] WASAT 183 (Lonepine) at [22]:
… I accept the Commissioner's submission that it is open to the Tribunal to have regard to the history of the legislative scheme in order to interpret a current statute. That is an approach which has been taken by the High Court inProject Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 per Brennan J at 366 368, and Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxationof the Commonwealth of Australia (1981) 147 CLR 297 per Gibbs CJ at 306 - 307 and per Stevens J at 310 312. In my view, where legislative provisions which provide a background to a provision assist in understanding that provision, then the earlier enactments constitute material capable of assisting the ascertainment of the meaning of the provision, and thus maybe taking into account under s 19(1) of the Interpretation Act 1984 (WA) where the provision is ambiguous or obscure. …
26 However, such things cannot be relied upon to displace the clear meaning of the text (Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39]).
Parties' submissions
27 Counsel for both parties filed helpful written submissions in respect of the issue.
Respondent's contentions
28 In its statement of issues, facts and contentions dated September 2015, the respondent discussed the legislative history of s 24A of the LTA Act and stated at paragraph 65:
It is apparent from an examination of the legislative history of s 24A of the LTAA below, that the possibility of the original lots being subdivided within the 2 year period, was not contemplated by Parliament.
29 The respondent then went on to submit:
79. Section 24A of the LTAA was enacted to deal with situations where a section 21 exemption is unavailable because the owner(s) are unable to use the property as their primary residence due to the fact that they are in the process of constructing a new residence.
80. Specifically, section 24A of the LTAA was enacted to provide an exemption where persons are in the process of constructing a new residence on the relevant lot and that construction spans more than one assessment year.
81. In this way, it can be seen that the references in section 24A of the LTAA to 'private residential property' and the crossreferenced term 'the property', are references to the 'lot' upon which the construction of the new residence is occurring (ie. in this case, it would be Lot 29). (Original emphasis)
…
84. Section 24A of the LTAA does not operate in a vacuum. It is to be applied in its statutory context which includes against the backdrop of other provisions in the LTAA which deem a subdivision to occur at an earlier date than under the Strata Titles Act (eg. upon the giving of an occupancy permit by the local government as opposed to upon registration of the strata plan or strata survey plan).
30 And in discussing the specific elements of s 24A, the respondent stated:
90. In this case, in relation to the first assessment year, the private residence was being constructed on Lot 29. However, in relation to the second assessment year, the private residence was completed/constructed on the newly subdivided lots (due to the deemed subdivision provisions of the LTAA discussed above).
91. Consequently, a problem arises in this case in relation to the first precondition. There are two 'private residential properties' (namely, Lot 29 and the newly subdivided lots), but neither existed for both consecutive assessment years.
…
94. As a subdivision is deemed to have occurred on 12 June 2014, the old original lot is no longer relevant for land tax assessment purposes. Instead, the newly subdivided lots become relevant for land tax assessment purposes. (Original emphasis)
31 In its response to the applicants' reply filed with the Tribunal in November 2015, the respondent explained its rationale that the old original lot was no longer relevant for land tax purposes as follows:
6. The LTAA however alters the time when subdivision occurs from that set out in the Strata Titles Act 1985 (WA).
7. The LTAA deems a subdivision to occur at a time earlier than registration of the strata plan or survey-strata plan.
8. The LTAA deems a subdivision of land (that is the subject of a strata plan) to occur:
(a) when the plan is approved by the Commission (if the plan is required to be accompanied by a certificate under the Strata Titles Act 1984 section 24); or
(b) when a certificate required under section 5B(2) of the Strata Titles Act 1985 is given by a local government (in other cases).
(see clause 3(1)(d) of the Glossary to the LTAA)
9. The above two events occur prior to registration of the strata plan, and this is why it can be said that the LTAA alters the time when subdivision of land (that is the subject of a strata plan) occurs from that set out in the Strata Titles Act 1985 (WA).
10. By deeming a subdivision to occur at an earlier point in time, the situation can arise where the old parent lot's certificate of title is yet to be cancelled and the new children lots are yet to have their certificate of title created. This creates a theoretical overlap situation.
(Original emphasis)
11. However, despite this theoretical overlap situation, the statutory context of LTAA makes it clear that the timing/event of subdivision is brought forward by the LTAA and therefore for the purposes of the LTAA at the time of the deemed subdivision:
(a) the land contained in the lots denoted upon the plan are treated as having come into existence (ie. The new children lots come into existence); and
(b) the old parent lots ceases to exist;
and so the new children lots resulting from the subdivision do not collectively constitute the same real property (ie land) from which they were subdivided.
(see section 43A of the LTAA for example)
(Original emphasis)
12. The chapeau of section 43A of the TLAA clearly indicates that the LTAA presumes that land tax then becomes payable on the new children lots and not the old parent lot. The new children lots are considered by the LTAA to have come into existence at the deemed subdivision date supplied by clause 3(1) of the Glossary to the LTAA and the old parent lot is considered by the LTAA to effectively cease to exist for the purposes of the LTAA.
33 The second was set out at paragraphs 14 to 16, which stated:
14. Although there is a theoretical overlap situation possible on the strict wording of the LTAA (ie. the definition of 'lot' in clause 2(1)(a) of the Glossary to the LTAA theoretically permits two categories of 'lot' to be satisfied in the present case, namely, cl 2(1)(a)(ii) and cl 2(1)(a)(vii)), there is a statutory interpretation principle that dictates that provisions of general application give way to specific provisions, such that the relevant category of 'lot' in the present case is only cl 2(1)(a)(vii) (ie, the new children lots) (this being the specific provision).
(for example, see Pearce and Geddes Statutory Interpretation in Australia 7th ed (2011), pp146-147 and Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation (1980) 29 ALR 333, 347)
15. This principle of statutory interpretation was more fully explained by Deane J:
As a matter of general construction, where there is a repugnancy between the general provision of a statute [general provision] and provisions dealing with a particular subject matter [specific provision], the latter must prevail and, to the extent of any such repugnancy, the general provisions will be inapplicable to the subject matter f the special provisions. … Repugnancy can be present in cases where there is no direct contradiction between the relevant legislative provisions. It is present where it appears, as a matter of construction, that special provisions were intended exhaustively to govern their particular subject matter and where general provisions, if held to be applicable to the particular subject matter, would constitute a departure from that intention by encroaching on that subject matter. (original emphasis)
- (Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corporation (1980) 29 ALR 333, 347)
16. The correct construction of the LTAA (ie. through section 43A of the LTAA and the statutory context provided by the legislative history revealed through the explanatory memorandum quoted above) indicate that the specific definition of 'lot' found in clause 2(1)(a)(ii)) of the Glossary was intended to exhaustively deal with clause 3(1)(d) type subdivisions.
Applicants' contentions
34 There were two principal grounds of objection to the Commissioner's reassessment made by the applicants which were:
1) As Lot 29 only ceased to exist with the cancellation of the old certificate of title in early July 2014, it therefore was still in place and existed as of 30 June 2014 at which date the applicants were occupying their new private residences.
2) As at 30 June 2014 the applicants qualified in respect of each of the provisions of s 24A(1) of the LTA Act.
35 In respect of the first ground, the applicants submitted as part of their submissions dated 25 August 2015 in support of the application:
17. The short argument in support of this ground is simply this:
17.1 at all material times up until after the end of the 2013/2014 assessment year, Lot 29 was the subject of a valid certificate of title that had not (yet) been cancelled, and a private residence was being constructed (or there was a private residence) on the land covered by Lot 29; and
17.2 by reason of the continuing validity of that certificate of title until after 30 June 2014, the whole of the land covered by Lot 29 fitted the definition of 'private residential property' for the whole of the 2013/2014 assessment year, and was therefore exempt for the whole of that assessment year.
34. When considering whether the exemption applies, it is important to pay very close attention to the actual wording of section 24A of the LTAA, which sets out the five criteria that must be satisfied for the exemption to apply.
35. As indicated in par 30 of the Objection, the applicants understand that there is no dispute that the criteria referred to in section 24A(1)(a) and (b) are satisfied. However, these submissions, unlike the Objection, will focus not only on pars 24A(1)(c), (d) and (e), but also on pars (a) and (b).
36. As to (a), the commencement date for the construction of the 'private residences' that formed part of the 'private residential property' (ie Lot 29, see above) either:
36.1 was in the first, 2012/2013, assessment year; or
36.2 was in a previous financial year and part of the construction was carried out in the 2012/2013 assessment year.
37. In relation to (a), it is important to note that:
37.1 the LTAA draws a distinction between 'private residences' and 'private residential property'; and
37.2 section 24(1 )(a) focuses on the former concept, not the latter concept.
However, the part of the Decision that rejected the second ground of the Objection erroneously treated these two distinct concepts as being interchangeable.
38. As to (b), the completion date for the construction (of the applicants' 'private residences') was in June 2014, during the second, 2013/2014, assessment year.
39. As to (c), at midnight on 30 June 2012, the applicants owned the 'land' on which the relevant 'private residences' were later constructed.
40. In relation to (c), it is important to note that the question is not whether the applicants owned the 'lot' on which the relevant private residences were later constructed, but whether they owned the 'land' on which those private residences were later constructed. There is a difference between 'lot' and 'land', but the part of the Decision that rejected the second ground of the Objection erroneously treated these two distinct concepts as being interchangeable.
41. As to (d), the relevant applicants were the first occupants of the relevant 'private residences'.
42. As to (e), the relevant applicants moved into, and therefore used, the relevant 'private residences' as their primary residences during the year ending 30 June 2014.
43. It follows that all five of the criteria set out in section 24A were satisfied, with the consequence that the relevant 'private residential property' (ie Lot 29, see above) was exempt for the 2012/2013 and 2013/2014 assessment years.
Consideration
37 Section 24A(1) of the LTA Act states:
(1) Private residential property (except property held in trust) that is owned by an individual is exempt for 2 consecutive assessment years if
(a) the commencement date for the construction of the private residence that forms part of the property is
(i) in the first assessment year; or
(ii) in any previous financial year and part of the construction is carried out in the first assessment year;
and
(b) the completion date for the construction is in the second assessment year; and
(c) at midnight on 30 June immediately before the first assessment year, the individual owned the land on which the private residence is constructed; and
(d) the individual is the first occupant of the private residence; and
(e) the individual uses the private residence as his or her primary residence during the second assessment year.
…
38 Private residential property is 'defined' in the Glossary as meaning:
(a) a lot of land on which there is a private residence; or
…
(d) for the purposes of sections 24, 24A, 27, 27A and 28 a lot of land on which a private residence is being or has been constructed;
39 Starting from the beginning, the words 'private residential property' are specifically defined for the purpose of s 24A as being 'a lot of land on which a private residence is being or has been constructed'.
40 Remembering that the LTA Act is a land tax Act, it is not surprising that the words 'private residential property' are defined as 'a lot of land' on which a private residence is being or has been constructed, as it is the lot of land that is critical.
41 Reading s 24A(1) of the LTA Act with this in mind, it would read:
A lot of land (on which a private residence is being or has been constructed) that is owned by an individual is exempt for two consecutive assessment years if …
42 The section then goes on to set out specific criteria that must be met to qualify for the exemption.
43 In respect of those criteria, it is agreed in the present case that:
a) the commencement date for the construction of the private residence that forms part of the property was in the first assessment year and that the applicants comply with that criteria;
b) the completion date, being 12 June 2014, the date the occupancy certificate was issued was in the second assessment year;
c) at midnight on 30 June, immediately before the first assessment year, the applicant owned the land on which the private residence was being constructed; and
d) the applicant was the first occupant of the private residence and used the private residence as his or her primary residence during the second assessment year.
44 The parties were agreed therefore that the applicants qualified on practically all of the criteria of s 24A, the key difference being that the respondent contended for the reasons outlined earlier that the 'lot of land', being the 'private residential property' in s 24A for which the exemption was granted and on which the new residence was erected and occupied on the relevant dates, must be the 'same lot of land' effectively from beginning to end, and that in the present case it was not, because once the new strata lots were deemed to exist on 12 June 2014, Lot 29 became 'redundant' for the purposes of s 24A and the four new strata lots became the relevant lots. The applicants, on the other hand, argued that although the new strata lots had come into existence, there is nothing in the Act to say that Lot 29, for which a registered certificate of title was still in existence, could not be relied on for the purposes of the exemption in s 24A.
45 At paragraphs 1 and 2 of its reply dated November 2015, the respondent acknowledged that in Western Australia the subdivision of land (that is, the subject of a strata plan) other than for land tax purposes occurs upon the actual registration of the strata plan or the surveystrata plan (s 4(1) of the ST Act). The Registrar of Titles then creates new certificates of title in relation to the new children lots and cancels the old certificate of title in relation to the old parent lot (s 4(4) of the ST Act).
46 To explain the consequences of subdivision, the respondent stated at paragraphs 3, 4 and 5:
3. Subdivision of land in Victoria occurs in a similar fashion.
(see Commissioner of State Revenue v Pattison (2001) 3 VR 520, 522) 7
4. Upon subdivision of land (under the Strata Titles Act 1985 (WA) and for example Victoria):
(a) land contained in the lots denoted upon the plan come into existence (ie. the new children lots come into existence);
(b) the old parent lot ceases to exist;
(c) the new children lots resulting from , the subdivision do not collectively constitute the same real property (ie land) from which they were subdivided.
5. The consequences of subdivision was explained clearly in Commissioner of State Revenue v Pattison (2001) 3 VR 520, 522:
Do the lots resulting from subdivision collectively constitute the same real property as the property from which they were subdivided and for which the purchase price was paid? The simple answer is no. Subdivision of real property in Victoria is achieved pursuant to the Subdivision Act 1988 and the Transfer of Land Act 1958 by registration of a plan of subdivision. Upon registration of the plan, land contained in the lots denoted upon it comes into existence, the parent title is cancelled, and in that sense the land in that former title ceases to exist. By this process, although the overall legal and beneficial ownership may remain unchanged, what was one piece of real property becomes two or more different pieces of real property that may be dealt with by reference to the new plan and lot number. They are ot somehow carved out of the former title; rather a new scheme is titles is created which may involve rights and burdens which were not previously present or necessary …
6. The LTAA however alters the time when subdivision occurs from that set out in the Strata Titles Act 1985 (WA).
7. The LTAA deems a subdivision to occur at a time earlier than registration of the strata plan or survey-strata plan.
8. The LTAA deems a subdivision of land (that is the subject of a strata plan) to occur:
(a) when the plan is approved by the Commissioner (if the plan is required to be accompanied by a certificate under the Strata Titles Act 1985 section 25); or
(b) when a certificate required under section 5B(2) of the Strata Titles Act 1985 is given by a local government (in other cases).
(see clause 3(1)(d) of the Glossary to the LTAA)
9. The above two events occur prior to registration of the strata plan, and this is why it can be said that the LTAA alters the time when subdivision of land (that is the subject of a strata plan) occurs from that set out in the Strata Titles Act 1985 (WA).
10. By deeming a subdivision to occur at an earlier point in time, the situation can arise where the old parent lots' certificate of title is yet to be cancelled and the new children lots are yet to have their certificate of title created. This creates a theoretical overlap situation.
(Original emphasis)
48 The Tribunal acknowledges that the consequence of the Registrar of Titles' actions clearly brings about the cancellation of a parent title or old lot which in the present case happened on 9 July 2014 when certificates of title for Lots 1, 2, 3 and 4 on Strata Plan 66512 were issued and the Certificate of Title Volume 1201 Folio 935 for Lot 29 was cancelled.
49 However, the Tribunal does not agree that the deeming of a subdivision to occur at an earlier time for land tax purposes has all of the same consequences. In this regard, the Tribunal notes the provisions of s 58 (instruments not effectual until registered) and s 63 (certificate to be conclusive evidence of title) of the Transfer of Land Act 1893 (WA).
50 The Tribunal follows and adopts the reasoning of Judge Chaney (as he then was) in Lonepine as to the correct construction of the definition of 'lots' and it is clear, based on that reasoning and on a plain reading of cl 2 and cl 3 of the Glossary of the LTA Act (as amended), that as of 12 June 2014, the date the City issued an Occupancy Permit as required under s 5B(2) of the ST Act, four new strata lots came into existence pursuant to cl 3(1)(d)(ii) and cl 2(1)(a)(vii) of the LTA Act.
51 However, did the old lot or parent lot, being Lot 29, still exist on 30 June 2014 to allow the applicants to rely on it to qualify for the exemption pursuant to s 24A of the LTA Act or was it, as the Commissioner stated, 'redundant' for land tax purposes?
52 The decision in Lonepine, with which the Tribunal agrees, was concerned with whether new lots had been created for land tax purposes. It did not touch upon the question of whether an existing lot in respect of which a certificate of title registered under the TL Act was in place became 'redundant' for the purposes of the exemption under s 24A when new lots came into existence pursuant to cl 2(1)(a)(vii).
53 As set out earlier, the two rationales on which the respondent relied to conclude that Lot 29 was redundant and not available to the applicants to qualify for a private residence exemption on 30 June 2014 were:
a) the chapeau of s 43A of the LTA Act clearly indicated that the LTA Act 'presumes' that land tax becomes payable on the new children lots and not the old parent lot, namely Lot 29; and/or
b) the theoretical overlap that arises between the old parent lot (which is still the subject of a certificate of title and falls within the definition cl 2(1)(a)(ii) of 'lot') and the new children lots (which are not yet the subject of certificates of title but fall within definition cl 2(1)(a)(vii) of 'lot') is reconciled by the principle of statutory interpretation that dictates that provisions of general application give way to specific provisions.
54 Dealing firstly with the respondent's reliance on the 'chapeau of s 43A': s 43A(1) of the LTA Act states:
Newly subdivided land, concession for
(1) If a lot (the old lot) is subdivided in the financial year before an assessment year, the land tax payable on a lot created by the subdivision (the new lot) is assessed under this section if …
55 Subsection 1(a) then goes on to state:
(a) the new lot was not created pursuant to a strata plan as referred to in clause 3(1)(d)[.] (Tribunal's emphasis)
56 Therefore, although s 43A might be helpful in particular circumstances, Parliament clearly excluded a new lot that was created pursuant to a strata plan as referred to in cl 3(1)(d) from the provisions of that particular section, which is precisely the circumstances of the present case. So to rely on the 'chapeau of s 43A' in these circumstances would, in the Tribunal's view, be fraught with danger and not correct.
57 In respect of the respondent's second contention that general provisions give way to specific provisions and therefore cl 2(1)(a)(ii) which recognises Lot 29 as a lot, due to it having a certificate of title registered under the TL Act, should give way to cl 2(1)(a)(vii), which recognises the four new lots depicted on the strata plan, one needs to first examine the actual wording of cl 2.
58 As set out earlier, cl 2 of the Glossary under the heading 'Lots and parcels of land' states:
(1) In this Act unless the contrary intention appears
lot means a defined portion of land
(a) which is the whole of the land the subject of
(i) a Crown grant issued under the Land Act 1933; or
(ii) a certificate of title registered under the Transfer of Land Act 1893; or
(iii) a certificate of Crown land title or qualified certificate of Crown land title, created and registered under the Transfer of Land Act 1893; or
(iv) a survey into a location or lot under the Land Administration Act 1997 section 27(2); or
(v) a partlot shown on a diagram or plan of survey of a subdivision deposited with the Land Information Authority; or
(vi) a conveyance registered under the Registration of Deeds Act 1856; or
(vii) a lot depicted on a strata plan or surveystrata plan where the land the subject of the plan has been subdivided within the meaning given in clause 3(1)(d) or (e); or
(viii) an entitlement to occupy a nonstrata home unit;
or
(b) depicted on a plan or diagram available from, or deposited with, the Land Information Authority and for which a separate Crown grant or certificate of title has been or can be issued; or
(c) depicted on a diagram or plan of survey of a subdivision approved by the Western Australian Planning Commission.
…
(Tribunal's emphasis)
59 From a plain reading of that definition and in particular the use of the word 'or' following each of the subclauses (1)(i) to (1)(vii) and (b) and (c), they all appear to be different ways by which a lot can be defined for the purposes of the LTA Act and no priority or ranking is mentioned.
60 As stated by counsel for the respondent, to apply the principle of statutory interpretation that provisions of a general application give way to specific provisions, 'what needs to be evident is that there was an intention that a particular specific provision was to apply in preference to the general provision …' (T:61; 26.11.15). In the Tribunal's view, that is not evident from cl 2 of the Glossary where each of the subclauses are simply alternatives of one another.
61 Clause 2(1) of the Glossary begins by clearly stating, 'unless the contrary intention appears', and then goes on to outline 10 different instances of what can constitute a lot for the purposes of the LTA Act.
62 If Parliament had intended, as the respondent contends, for one of the alternatives to be preferred over another, or to exclude another, it could very easily have inserted words to that effect, as it did in s 43A where it stated at s 43A(1)(a):
[T]he new lot was not created pursuant to a strata plan as referred to in clause 3(1)(d)[.]
(Tribunal's emphasis)
63 It is not, in the Tribunal's view, clear that Parliament intended that a taxpayer would lose the private residence exemption under s 24A merely because their lot of land on which they had constructed a private residence and into which they had moved would be automatically lost if the lot could fit more than one of the alternative descriptions of 'lot' in cl 2(1) in the definition.
64 In the present case, what the respondent described as a 'theoretical overlap' meant that on 30 June 2014 two categories of lot satisfied the definition of 'lot' under cl 2 of the Glossary of the LTA Act, namely, Lot 29, in respect of which there was a certificate of title registered (cl 2(1)(a)(ii)) and the four lots depicted on the strata plan in respect of which an occupancy certificate (cl 2(1)(a)(vii) had been issued.
65 To find in favour of the respondent, the Tribunal would have to imply or assume an intention that once a new lot is deemed to come into existence for land tax purposes as per cl 2(1)(a)(vii) of the LTA Act, another legitimate and recognised definition of 'lot', being the certificate of title registered under the TL Act becomes redundant. As counsel for the respondent stated, 'one can't assume purpose' (T:69; 26.11.15).
66 The Tribunal notes that in 2008 and on later occasions, amendments have been made to clauses 2(1), and 3(1)(d) of the Glossary and s 24A of the LTA Act. If Parliament had intended for either s 24A or cl 2 of the Glossary to be construed in the way the respondent contends, Parliament could have made that clear and had the opportunity to do so. However, no such clarification was inserted on any of those occasions.
67 In the Tribunal's view, the Commissioner's interpretation is not clear from a plain reading of the text and, as outlined earlier, the Tribunal is not persuaded by the Commissioner's reliance on either the 'chapeau of s 43A' or the rule of statutory interpretation which prefers specific provisions over general provisions.
68 In s 43A of the LTA Act, Parliament saw fit to make it clear that new lots created pursuant to a strata plan as referred to in cl 3(1)(d) were not covered by that section, and it would have been a relatively straightforward addition of a few words if Parliament had wanted one definition of 'lot' in cl 2(1)(a) to be the preferred alternative if a lot happened to fit two descriptions. But as stated above, Parliament did not see fit to do so.
69 In Drouin Commercial Pty Ltd and Commissioner of State Revenue [2009] VCAT 1082 at [31] the Tribunal in that case stated:
More generally, in relation to the absurdity or purpose argument, there is, in my opinion, considerable difficulty in arguing that a carefully cast set of legislative provisions, such as Division 4 and its related provisions, which, as the Applicant emphasises, contains detailed definition provisions or provisions in the nature of definitions of critical terms, can be said to produce an absurd construction or a construction at odds with the Parliament purpose where those provisions are construed according to their ordinary, literal, meaning. …
70 Those remarks are equally relevant and applicable to the present case and this Tribunal adopts them. The provisions of s 24A and the relevant definitions considered according to the ordinary, literal meaning do not create an absurd result.
71 This is particularly so in circumstances where an individual qualifies for an exemption of their private residence, but by attempting to legally occupy that private residence obtains local government approval to do so, they then lose the s 24A exemption because the lot upon which their private residence is built also fits a second or alternative definition of a 'lot' in cl 2 of the Glossary.
72 The Tribunal is satisfied that on a plain reading of the LTA Act, cl 2(1)(a) of the Glossary, which gives 10 alternatives to define a lot, allows the Commissioner to rely on a definition more favourable to the taxpayer.
73 There is no general rule that an interpretation which maximises revenue should be preferred or was the intended purpose. As stated by French CJ in Alcan (NT) Alumina Pty Ltd and Commissioner of Territory Revenue (NT) (2009) 239 CLR 27 at 11:
… The terms are not to be read by reference to some general principle that requires taxing statutes to be construed so as to maximise the recovery of revenue.
74 A liability for land tax arises on the basis of land owned at midnight on 30 June, and where an exemption is provided because of a particular use of the land, such use is measured at that time. In the present case the applicants were using Lot 29 as their primary residence on 30 June 2014 for the purposes of the s 24A exemption. It is recognised that four strata lots were also deemed to have come into existence at that date for land tax purposes, but that merely meant that the land qualified under two definitions of 'lot' not that one definition is to be preferred over the other.
75 In the circumstances, the correct and preferable decision is that on 30 June 2014, Lot 29 on Diagram 22109, being Certificate of Title Volume 1201 Folio 931 constituted private residential property that was exempt for assessment purposes pursuant to s 24A of the LTA Act on 30 June 2014.
Orders
1. The Commissioner of State Revenue's reassessment of land tax dated 24 August 2014 that Lot 29 on Diagram 22102, Certificate of Title Volume 1201, Folio 935 does not qualify for the exemption from land tax under s 24A of the Land Tax Assessment Act 2002 (WA) is set aside.
2. The matter is sent back to the Commissioner of State Revenue for assessment in accordance with the reasons for decision dated 13 May 2016 published with this order.
- I certify that this and the preceding [75] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR M SPILLANE, SENIOR MEMBER
0
10
4